Vijay Omprakash Bansal vs Commissioner Of Income-Tax
2001 Latest Caselaw 963 Bom

JUDGMENT

H.L. Gokhale, J.

1. Heard Mr. N.S. Bhattad, the learned advocate for the petitioner, and Mr. Anand Jaiswal, the learned advocate for the respondent, rule, made returnable forthwith. Reply has been filed by the respondent. Petition and reply perused and submissions of both counsel are heard.

2. The petitioner herein is assessed to income-tax for a number of years and he wanted to avail of the benefit under the Kar Vivad Samadhan Scheme, 1998. Under that scheme, the assessee is required to make payment of the required amount (which is stated to be around 30 per cent, of the full assessment) within a period of thirty days after the required amount is communicated to the assessee. In the event the amount is so paid it is accepted as a one-time full settlement. In the instant case, the petitioner was communicated that under the said scheme, his liability will be Rs. 2,18,451. This intimation was given to him on December 10, 1998. The last date for making payment was January 9, 1999. On January 9, 1999, the petitioner went to the Income-tax Department to deposit the amount only to learn that the payment is to be made in a nationalised bank. January 9, 1999, was Saturday and, therefore, he made the payment on January 11, 1999, by a challan in a nationalised bank. The respondent rejected the claim of the petitioner for one-time settlement on the ground that the payment was not made within time. Before rejecting the claim, a notice dated November 3, 1999, was issued and then the rejection order was passed on January 28, 2000. The petitioner did not file any reply to the said notice, but he chose to file this petition.

3. It is stated on behalf of the respondent that the petitioner is a regular assessee and he should be aware of the fact that the payment under the scheme is to be made with a nationalised bank and that the Income-tax Department does not accept any such payment and hence his plea that he went to make the payment on January 9, 1999, to the Department should not be accepted. It is further submitted that the Scheme requires payment to be made within thirty days and there is no provision for condonation of delay. This being the position, according to the respondent, the Department was justified in rejecting the petitioner's application. It is this order of rejection dated January 28, 2000, which is challenged in this petition.

4. Section 90 of the Kar Vivad Samadhan Scheme, 1998, is the relevant section and, particularly, Sub-sections (1) and (2) thereof. These two sub-sections of Section 90 read as under :

"90. Time and manner of payment of tax arrear.--(1) Within sixty days from the date of receipt of the declaration under Section 88, the designated authority shall, by order, determine the amount payable by the declarant in accordance with the provisions of this scheme and grant a certificate in such

form as may be prescribed to the declarant setting forth therein the particulars of the tax arrear and the sum payable after such determination towards full and final settlement of tax arrears :

Provided that where any material particular furnished in the declaration is found to be false, by the designated authority at any stage, it shall be presumed as if the declaration was never made and all the consequences under the direct tax enactment or indirect tax enactment under which the proceedings against the declarant are or were pending shall be deemed to have been revived :

Provided further that the designated authority may amend the certificate for reasons to be recorded in writing.

(2) The declarant shall pay, the sum determined by the designated authority within thirty days of the passing of an order by the designated authority and intimate the fact of such payment to the designated authority along with proof thereof and the designated authority shall thereupon issue the certificate to the declarant."

5. Mr. Bhattad, learned counsel appearing for petitioner, took us through the judgments of different High Courts on this point. Firstly, he referred us to a judgment of a Division Bench of the Punjab and Haryana High Court in the case of Smt. Laxmi Mittal v. CIT [1999] 238 ITR 97. In this case, the court was considering a similar provisions under the Voluntary Disclosure of Income Scheme, 1997. There was a delay of three days on the part of the assessee in making the payment. While commenting on Section 67 of that Scheme, the Division Bench of the Punjab and Haryana High Court observed that the said section "does not embody a totally inflexible rule" and "when things are beyond the control of the citizen. Certain moving space is normally allowed." This judgment was followed by a learned single judge of the Madras High Court in E. Prahalatha Babu v. CIT [2000] 241 ITR 457. That was also a case of three days' delay in making the payment under the Voluntary Disclosure of Income Scheme, 1997, and the delay was condoned.

6. What is material to note is that the above referred judgment of the Division Bench of the Punjab and Haryana High Court was followed by a learned single judge of the Madhya Pradesh High Court in Sardar Machhi Singh v. CIT [2000] 245 ITR 58, which was a matter arising out of this very section of the Kar Vivad Samadhan Scheme, 1998, with which we are concerned in the present matter. In that case, the payment was to be made by March 25, 1999, which was a bank holiday. The next day was working day but the assessee made the payment on the subsequent day, i.e., on March 27, 1999. Relying on the judgment in Smt. Laxmi Mittal's case [1999] 238 ITR 97 (P & H), the Madhya Pradesh High Court entertained the petition and directed the Commissioner of Income-tax to pass appropriate order accepting the declaration of the petitioner therein. This judgment of the learned single judge was

carried in appeal in S.L.P. (Civil) No. 11153 of 2000, CIT v. Sardar Machhi Singh and the same was rejected by a Division Bench of the apex court as reported in [2000] 245 ITR (St.) 70 under the caption "Kar Vivad Samadhan Scheme".

7. The judgment in the case of Smt. Laxmi Mittal v. CIT [1999] 238 ITR 97 (P&H), was dissented from by another Division Bench of the Punjab and Haryana High Court in Kamd Sood v. Union of India [2000] 241 ITR 567 but, the issue was not issued to a larger Bench. Similarly, a judgment was also rendered by a Division Bench of the Andhra Pradesh High Court in Vyshnavi Appliances P. Ltd. v. CBDT [2000] 243 ITR 101 wherein the view taken in Smt. Laxmi Mittal's case [1999] 238 ITR 97 (P & H), was differed from. It is, however, material to note that both these judgments are prior to the dismissal of the special leave petition in the case of CIT v. Sardar Machhi Singh [2000] 245 ITR (St.) 70. There are three more judgments taking a strict view of the provision after the dismissal of the above referred special leave petition, viz., the one of the Kerala High Court in K. Dilip Kumar v. CIT (Assistant) [2001] 247 ITR 16, the second of the Karnataka High Court in Smt. Atamjit Singh v. CIT [2001] 247 ITR 356 and the third of the Madras High Court in M. Kuppan v. CIT [2001] 249 ITR 543. It is, however, material to note that the fact of dismissal of the special leave petition is neither considered nor even mentioned in any of these judgments.

8. Mr. Bhattad, learned counsel for the petitioner, therefore, submits that apart from the fact that the view of the Madhya Pradesh High Court in Sardar Machhi Singh v. CIT [2000] 245 ITR 58, is left undisturbed by the apex court, it is an established position that in the event of an ambiguity the provisions of a taxing statute are normally construed liberally in favour of the assessee. He points out that if a provision of a taxing statute can be reasonably interpreted in two ways, that interpretation which is favourable to the assessee, has got to be accepted. He relies upon the judgments of the apex court in CIT v. Naga Hills Tea Co. Ltd. [1973] 89 ITR 236 and CIT v. Vegetable Products Ltd. [1973] 88 ITR 192 in this behalf.

9. Mr. Anand Jaiswal, learned counsel appearing for the respondent, on the other hand, submitted that mere dismissal of a special leave petition does not mean laying down of any law by the apex court. He relies upon the judgment of the apex court in Kunhayammed v. State of Kerala . Relevant observations are in paragraph 40 of the said judgment where the court observes (page 2600 of AIR 2000 SC and page 380 of 245 ITR) :

"The dismissal is not of the appeal but of the special leave petition. Even if the merits have been gone into, they are the merits of the special leave petition only. In our opinion, neither the doctrine of merger nor Article 141 of the Constitution is attracted to such an order."

10. Mr. Jaiswal secondly submits that as far as the present scheme is concerned, it cannot be said that there is any doubt or ambiguity about it. Section 90 of the Scheme clearly shows that the declarant shall pay the sum determined by the designated authority within thirty days of the passing of an order. He emphasises the words "shall" and "within" and states that there is no ambiguity and, therefore, the writ petition ought to be dismissed.

11. On the question of condonation of delay Mr. Bhattad pressed into service the observations of the apex court in Director of Inspection of Income-tax (Investigation) v. Pooran Mall and Sons [1974] 96 ITR 390. The relevant observations of the apex court in the context of Explanation I to Section 132 of the Income-tax Act, at the end of page 396 of the said Report are as under :

"Especially after the Limitation Act, 1963, the provisions of which are now applicable to all proceedings, a provision like Explanation 1 to Section 132 is superfluous and no argument can be based on it."

12. Mr. Bhattad, therefore, submits that the concept of sufficient cause has to be permitted to explain this delay of two days.

13. We have given anxious consideration to the submissions made by both counsel. The provisions of Section 90(2) of the Scheme undoubtedly require the declarant to make the payment within thirty days from the passing of the order made by the designated authority. However, the said section states that the declarant shall pay the amount accordingly. The Scheme is undoubtedly for the benefit of the assessee who wants a one-time settlement. At the same time, it could not be ignored that the Revenue also benefits due to an early settlement and quick payment. These objectives have to be kept in mind while considering the provisions of this scheme and the courts must accept the beneficial interpretation which will serve both these objectives. The word "shall" has been interpreted as "may" on many occasions. In our view, it cannot be said that this provision prohibits any explanation or lays down an "inflexible rule" as observed by the Division Bench of the Punjab and Haryana High Court in Smt. Laxmi Mittal v. CIT [1999] 238 ITR 97. That judgment of the Punjab and Haryana High Court in Smt. Laxmi Mittal v. CIT [1999] 238 ITR 97 was followed by the Madhya Pradesh High Court in Sardar Machhi Singh's case [2000] 245 ITR 58, and it has been left undisturbed by the apex court. A controversy has arisen about the interpretation of this provision and different High Courts have interpreted it differently. Apart from the fact, that the apex court has left the judgment in Sardar Machhi Singh's case [2000] 245 ITR 58 (MP) undisturbed and without going into the question of the effect thereof, in our view also this interpretation is preferable for the reasons given above.

14. In the facts of the present case, when the assessee went to make the payment on Saturday to the Income-tax Department and when the payment was not accepted, he made the payment immediately on the next working day, i.e., on Monday. No doubt, the Scheme is meant for diligent assessees, yet it can-

not be read as to exclude genuine difficulties or explanation. In the present case, the petitioner-assessee has his own explanation, that by mistake he went to the Income-tax Office on Saturday and immediately on Monday he has made the payment in the bank. It is true that the petitioner was assessed to income-tax for a number of years earlier. Yet it is possible that with such a special scheme an assessee could be in doubt as to where the payment is to be made. In our view, the explanation given by the petitioner, cannot be rejected, particularly when immediately on the next working day he has made the payment in a nationalised bank. The provision of Section 90 will have to be read flexibly in the interest of the assessees to permit genuine explanations.

15. In the circumstances, the impugned order passed by the respondent on January 28, 2000, is quashed and set aside, and the respondent is directed to issue the clearance certificate to the petitioner under the said scheme.

16. Rule made absolute in the aforesaid terms, though without any order as to costs.